Washington Voters to Decide on Nation's First Carbon Tax

Washington lawmakers have tried and failed in recent years to make polluters pay for their carbon emissions to fight climate change. Now, voters will get to decide.

An initiative on the November ballot asks voters whether the state should impose the nation’s first direct carbon tax on the burning of fossil fuels such as coal and gasoline.

Sponsors say residents have a moral responsibility to curb greenhouse gas emissions, and a carbon tax is the best way to do it. The tax encourages businesses to conserve or switch to clean energy by making fossil fuels more expensive, and it makes the tax system fairer by using the revenues to reduce other taxes, they say.

Businesses say the tax will drive up fuel and energy costs and put Washington companies at a competitive disadvantage.

And in a move that has bewildered some, major environmental and other groups—including those that backed Gov. Jay Inslee’s proposal last year to cap emissions and make carbon polluters pay—oppose the initiative. They say it takes the wrong approach.

Yoram Bauman, an economist who founded Carbon Washington, the grassroots group that gathered more than 350,000 signatures to qualify Initiative 732, defended it as great climate and tax policy.

“It does almost everything right for Washington,” he said.

Audubon Washington supports it.

“Our members came down on the side of urgency. We don’t have time to wait,” said Gail Gatton, the group’s executive director. “Climate change is happening, and this is our best available option right now to protect birds.”

But the Sierra Club, Washington Environmental Council and the advocacy group Front and Centered say the initiative is the wrong carbon-pricing approach and will hurt the state’s revenues. Whereas Inslee’s pollution fee would have raised money for education, transportation, clean energy and programs to help disadvantaged communities affected by climate change, Initiative 732 provides no such investments, critics say.

“It’s not a path that makes sense for our communities,” said Rich Stolz, executive director of OneAmerica, which works on social justice issues. Stolz said the initiative ignores climate justice and lacks input from communities of color.

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Stolz’s group is part of a coalition that worked on an alternative carbon-pricing measure. Last-minute talks between that coalition and I-732 supporters to collaborate on one ballot measure fizzled last year.

The initiative is designed to be revenue neutral, meaning the tax revenue increase from fossil fuels would be mostly offset by decreases in other taxes. In this case, revenues would be returned to people and businesses by cutting the state sales tax by one point, virtually eliminating business taxes for manufacturers and providing rebates for working families, sponsors say.

A state analysis, however, estimates the measure could cost the state about $800 million in lost revenues over the first six fiscal years. Initiative sponsors dispute the state’s analysis, saying it double-counted the rebates in the first year.

The carbon tax is modeled after one in the nearby Canadian province of British Columbia. California has a cap-and-trade program, which limits emissions and allows carbon polluters to buy and trade pollution credits. If approved, Washington’s carbon tax starts at $15 a ton of carbon emissions in July, goes up to $25 the next year and incrementally increases afterward.

The Washington State Tree Fruit Association, which represents growers, packers and marketers, is among those opposed.

It takes a lot of fuel to grow and transport produce, and the tax will be paid by those in the state, not competitors outside it, said Jon Devaney, the group’s president.

“Raising food prices in Washington state will make us less competitive compared to others,” he said.

Initiative sponsors say a $25 carbon tax would raise the price of gasoline by about 25 cents per gallon and the price of coal-fired electricity by about 2.5 cents per kilowatt-hour. They say power plants and fuel suppliers likely will pass those costs on to consumers, but that consumers will see price reductions in other things they buy because the sales tax is cut. The tax wouldn’t apply to electricity from renewables like hydro, wind or solar power.

The campaign has raised $1.2 million from nearly 1,200 unique donors; more than half of those total contributions are under $200.

The No on 732 campaign sponsored by the Association of Washington Business has raised $300,000 to oppose the tax.

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